The 3 Types of Property Buyers in the Philippines (Know Which One Are You)

The short answer

People buy real estate in the Philippines for one of three reasons: to live in it now, to use it later, or to earn from it. None of them is better than the others. What matters is knowing which one is yours, because it shapes what to buy, how to pay, and what to check before you reserve.

Timing is a good place to see the difference. Every preselling price breakdown states how long the downpayment runs and how much of the price is still due when it ends. On the studio worked through below, that’s 60 months, with 90% of the price left to pay after. If you’re buying for later, that gives you time to prepare. If you need to move in soon, a home that’s already built will likely serve you better.

It isn’t your fault if nobody has asked you about your reason yet. Property is often talked about as one kind of purchase, when there are really three, and each deserves to be approached on its own terms.

And if you’re still deciding between a condo and a house and lot, that’s a separate choice. The guide to which one fits you walks through it step by step.

The three types at a glance

The three reasons people buy property

Each reason runs on its own clock. Buying to live in it now means you need the keys soon, so the home has to be finished or close to it. Buying to use it later means you have time, and a payment plan can put that time to work. Buying to earn means the numbers come before anything else, because rent that doesn’t cover the costs leaves you paying to own it.

The reason also decides what you check first. A home you’ll live in is judged by the life it gives you: the commute, the space, and a monthly you can carry for twenty years. A unit you’ll rent out is judged by the rent it can actually get, after dues and empty months.

A buyer can hold two reasons at once. An OFW buys a unit to come home to in ten years and rents it out until then. That works. It still helps to know which reason leads, because when the two pull different ways, the leading one should decide.

One price breakdown, three readings

Every preselling unit comes with a price breakdown: the price, the monthly payments, and what’s left to pay at the end. The same sheet answers a different question for each of the three buyers, so it helps to know which question is yours before you read one.

Here’s a real example: a 24.80 sqm studio in Mactan, from one of the preselling projects I currently represent. Its downpayment is ₱10,300 a month for 60 months. Together with the reservation fee, those payments cover a tenth of the price. The other 90% is due after that, paid in cash or through a bank loan.

These figures are the developer’s own, from its current price list for this tower. Both prices and availability move.

If you’re buying to live in it now, look for when you can move in. On a preselling unit, that comes after the downpayment, and only once the balance is paid. A home that’s already built, of either type, will suit you better.

If you’re buying for later, look past the monthly payments to what comes after them. Once the balance becomes a bank loan, the monthly changes. At an example rate of 6% over 20 years, this studio’s would be ₱41,744, about four times what you paid before. This is an example rate. It isn’t a quote from any bank. Ask for the same figure on any unit you’re considering, so you can plan for it from the start.

If you’re buying to earn, look at what the rent has to cover. If you’re counting on rent to pay that loan, this studio would need to rent for ₱41,744 a month, before association dues and any months it sits empty. Compare that with what similar units in the same building actually rent for. Where the rent falls short, the difference comes from your income.

Whatever your reason, the price list also names what its price leaves out: move-in charges, utility connections, association dues, and the charges that come with releasing a loan. None of them has a figure on the sheet, so ask for each in writing before you reserve.

Type 1: Buy to live in it now

You need a home, and you need it soon. These buyers judge a property the way they’ll use it: every day, for years.

First-time homebuyers

You’re renting, or living with family, and you’d like your monthly to go toward a place of your own. It might be just you, or the two of you, working in Cebu City or Mandaue. Renting a few more years while you save is a plan too, and the checks below still apply when you’re ready.

• The reason: a home of your own, soon enough to stop paying rent.
• What tends to fit: a home sized for the household you’ll have in the next few years. Ready-for-occupancy if you need to move soon; preselling if you can keep renting while it’s built. Preselling vs RFO shows how to tell which one your timing points to.
• Ways to pay: Pag-IBIG, a bank loan, or in-house financing, where the developer lends you the balance itself. Pag-IBIG also runs a program with a subsidized rate on lower-priced homes for minimum-wage and low-income members, so ask whether you qualify.
• Watch out for: the monthly you’re quoted. During a preselling downpayment it can be a fraction of what the bank charges afterward. On the studio above, it’s ₱10,300 during the downpayment and ₱41,744 after it, at an example rate. Ask for the monthly after the downpayment before you reserve, because that’s the one you’ll be paying for twenty years.

If the condo-or-house question is where you’re stuck, How to Know Which One Fits You takes it factor by factor.

Upgraders

Your household has outgrown the place you’re in. A second child, a parent moving in, grandparents who need a bedroom on the ground floor.

• The reason: more room, for a household that’s grown or is about to.
• What tends to fit: a house and lot, for the rooms and the land. Or a larger condo unit, where being near work and school counts for more than a yard.
• Ways to pay: the sale of your current home, a bank loan, Pag-IBIG, or a mix.
• Watch out for: paying for two homes at once. If the money for the new one depends on selling the old one, that sale has to close before the payment it’s meant to cover falls due. Price both sides before you reserve, and budget a few months of carrying both.

Downsizers and empty nesters

The children have moved out, and the family house has more rooms than you use. You’d rather spend your weekends on something other than the roof and the garden.

• The reason: less house to look after, and perhaps a shorter trip to the hospital, the market and the people you see.
• What tends to fit: a condo unit, or a smaller house and lot.
• Ways to pay: the sale of the family house can let you pay in cash, with no loan at all.
• Watch out for: the monthly that replaces the yard work. A condo charges association dues every month for as long as you own it, set by the size of the unit. Ask for the current rate per square meter in writing and add it to your budget. A smaller house and lot keeps the repairs with you, and its association dues, where the subdivision charges them, are worth asking for the same way.

Retirees

You’re settling down after your working years: in the city you worked in, in the province you grew up in, or back home after years abroad.

• The reason: a home for the years after work, close to what matters most in them.
• What tends to fit: a ready-for-occupancy home of either type, near a hospital, family, and the places you’ll go each week.
• Ways to pay: savings, retirement pay or the sale of another home. A loan is still possible. The term you can take shortens as you get older, because lenders want a loan paid off before the borrower reaches a set age.
• Watch out for: the stairs and the trip. Time the drive to the hospital you’d use. In a house, count the steps from the gate to the bedroom. In a condo, ask what the building’s backup power runs during an outage: the elevators, or only the lights.

If you’ve taken another citizenship, or you’re retiring here as a foreign national, read the section on buyers the law treats differently before you choose.

Type 2: Buy now, use later

You’re buying today for a life that starts later. Until then, the property might stand empty, house your family, or earn rent.

OFWs

You work abroad. The home is for your family now, for you when you come home, or both. Some OFWs rent it out until they return, and some don’t, by choice:

“There are many Filipinos who are based overseas who bought condo units. Their properties are idle. They don’t want them to be rented... No tenants and it’s okay for them...”

Comment on a Philippine property video

• The reason: a home to come back to, and often a home for the family in the meantime.
• What tends to fit: preselling, timed so the keys arrive near your return. A ready home of either type if your family needs it now.
• Ways to pay: monthly downpayments from abroad, then a bank loan, Pag-IBIG or cash. Pag-IBIG membership is open to OFWs. Income earned abroad can take more paperwork for a bank, so ask a bank what it needs from you before you reserve.
• Watch out for: a monthly quoted in the currency you earn. It can sound small, because it’s being compared with a foreign salary. Convert it to pesos, then ask for the bank-stage monthly, which comes later, in pesos, and bigger. Plan, too, for the months between contracts, when the downpayment is still due.

Parents buying for their children

Your child is starting college in Cebu City, now or in a few years. Instead of paying for a dorm or a boarding house, you’re thinking of buying a unit near the school.

• The reason: a place for your child to live while studying, and a property that’s still yours afterward.
• What tends to fit: a studio or a 1-bedroom close to campus.
• Ways to pay: the same routes as any home: a downpayment from your income, then a bank loan, Pag-IBIG or cash.
• Watch out for: the calendar. On the studio above, the downpayment alone runs 60 months, longer than a four-year course. Bought preselling the year your child enrolls, it may be ready after they graduate. Buy it years ahead, or buy ready. Then decide what it becomes after graduation: a younger sibling’s, a rental, or a sale. If it’s a rental, read the building’s leasing rules before you reserve.

Second-home and leisure buyers

You live in the city and want somewhere to get away to: by the sea in Mactan, or out of town. You’ll use it on weekends and holidays, and one day it may go to your children.

• The reason: a place for rest and family time, now and for the next generation.
• What tends to fit: a condo in a resort area, or a house and lot outside the city.
• Ways to pay: cash or a bank loan, on top of the home you already carry.
• Watch out for: the weeks it sits empty. Dues, upkeep and someone to look after it keep costing whether you visit or not. If you plan to list it for short stays while you’re away, read the building’s or the subdivision’s rules on that first.

Type 3: Buy to earn

You’re buying for the return. That’s a fair reason, and it’s the one that asks the most of the numbers. A home can be worth owning even if it never earns. An investment can’t.

Rental-income investors

You want the property to pay you every month: one tenant on a yearly lease, or guests for a few nights at a time.

• The reason: monthly income.
• What tends to fit: a unit of a size and in a place that tenants in that building already rent. A long-term lease trades a lower rate for steady occupancy and less work. Short stays earn more per night, with more empty nights, more cleaning and more managing, and some buildings and subdivisions restrict them.
• Ways to pay: cash, or a loan you could carry with no tenant at all.
• Watch out for: any yield you’re quoted. Ask whether it’s gross (the rent before any costs) or net (what’s left after dues, tax, repairs and empty months). Then work out the rent the price would need, and compare it with current listings in the same building.

Appreciation investors and land bankers

You’re buying to hold and sell later for more. It might be land, bought before the roads and buildings around it, and held for years.

• The reason: a rise in value over time.
• What tends to fit: land, or a property in an area you know well enough to judge what’s coming to it.
• Ways to pay: cash, or a loan you repay from your income while the property earns nothing.
• Watch out for: time. Land pays no rent while you hold it, real property tax comes due every year, and finding a buyer when you want to sell can take years. Nobody can promise the rise. Ask what’s actually funded and being built nearby, and whether the asking price already charges you for it.

Bargain hunters

You’re after a lower price, through foreclosed homes that Pag-IBIG and the banks sell to recover their loans.

• The reason: paying less than a comparable home would cost elsewhere.
• What tends to fit: foreclosed houses and condo units, sold through public auctions and negotiated sales.
• Ways to pay: cash, or the seller’s own financing where it offers some. Ask before you bid.
• Watch out for: “as is, where is.” These homes are usually sold that way, so you take them in the condition they’re in. See the property before you bid. Ask whether anyone still lives there, and what’s unpaid in association dues and real property tax. Then have the title checked. Comparing the copy you’re given with a certified copy is a step I’m glad to go through with buyers. Where the two don’t match, a lawyer’s review comes before any money changes hands.

Buyers the law treats differently

Two groups of buyers have rules of their own.

Foreign buyers

If you’re not a Filipino citizen, a condo unit is the usual way to own a home here. Foreign owners can hold units in a condo project up to 40% of it, and land, which comes with every house and lot, isn’t open to them. The details turn on your own situation, so how you’d hold the property is worth setting up with a lawyer before you reserve. I’m glad to work alongside them on the property side.

Former Filipinos and dual citizens

If you were born Filipino and later took another citizenship, separate rules apply to you, not the ones for other foreigners. They cover whether you can buy land and how much, and getting your Philippine citizenship back changes them again. Which ones apply depends on your papers. A lawyer is the right person to settle that before you choose a property, and I’m glad to help my clients get their documents and questions ready for that meeting.

Three lessons for any buyer

1. If you’ll live in it, judge it as a home first. A home earns its keep in hours saved on the commute, in room for the people in it, and in a monthly you can carry for decades. A rise in value is welcome. Nobody can promise it, so it can’t be the thing that makes a home right for you.

2. Your timeline picks the property and the payment plan. “Now” points to ready-for-occupancy. “Later” points to preselling with its runway lined up to your date, or a ready home you hold until then. “Earn” points to whichever property the rent supports. The studio above shows all three on one sheet.

3. Land and buildings age differently. A building wears out and its value falls as it ages. Land doesn’t wear out. A house and lot keeps more of its value in its land. A condo keeps more of its value in the building, and gives you its location and shared upkeep in return. If a rise in value is your reason, know which part of the price you’re paying for.

Which type are you?

Answer these quickly, with the first answer that comes to you.

1. Do you need to move in within a year? Yes: Type 1.
2. Can you name the date you’ll start using it, like your return from abroad, your retirement, or a child’s first year of college? Yes: Type 2.
3. Would you still buy it if you could never live in it? Yes: Type 3.
4. If it never rented out and never rose in price, would you still want it? Yes: Type 1 or 2. No: Type 3.
5. Will the monthly after the downpayment come from your salary, or from rent? Rent: Type 3, and run the rent check before anything else.
6. Who will be living in it five years from now? You or your family: Type 1 or 2. A tenant, or nobody: Type 3.

Your next read:

• Mostly Type 1: House and Lot or Condo? How to Know Which One Fits You, to choose the kind of home your life needs.
• Mostly Type 2: the financing part of the house and lot vs condominium guide, because a buyer for later is choosing a payment plan as much as a property.
• Mostly Type 3: the investment part of the same guide, for gross and net yield, depreciation and resale.

What I think

Each of these reasons is a sound reason to buy. A home now, a home for later and an income are not a ranking, and a buyer who wants one is not wiser than a buyer who wants another.

Still, I think every purchase needs one reason in front, and it should be the reason you would still hold if the other two fell away.

The test is one question. If this property never rented out and never rose in price, would you still be glad you own it?

If the answer is yes, you are buying a home, now or for later. Judge it as one, and treat any rent or rise in value as welcome but not as part of the plan. If the answer is no, you are buying to earn. Then the rent check decides, and the right unit is the one whose numbers hold, which may be a different unit or a different price. Either answer leads to a purchase you can explain.

When I first sit down with a buyer, I ask which of budget, location and timing cannot move. Knowing your reason for buying is how you answer it.

Questions

The one thing to take with you

Know why you’re buying before you choose what to buy.

It’s natural to want all of it: a home now, a place for later, and something that earns. One property can sometimes do two of those. It still needs one reason in front.

Before your next viewing, write your reason at the top of a page, and hold every price breakdown you’re handed up against it. And if my numbers on the studio don’t hold against your own bank’s, tell me.

The same unit can be the right buy for one reason and the wrong buy for another. Settle the reason first, and the unit gets easier to choose.